Top 10 Low Cost Start Up Business Ideas You Can Launch Today
Thousands of people all across America dream about starting their own business. No matter what your motivation is for being your own boss, you can start a business much sooner than you think and for far less. In fact, there are hundreds of enterprises waiting to be launched that don’t require a great deal of capital.
If owning your own business is your goal, the good news is, you can accomplish it with a solid idea and very hard work. But coming up with the right idea isn’t always the easiest thing. If you’re not confident where to start, here are 10 low cost, easy to start business ideas, spanning a variety of industries that you can launch quickly.
- Independent Sales Representative – Major direct selling companies such as Mary Kay, Avon, Herbalife, Pampered Chef, and Primerica all offer the opportunity for individuals to enroll as independent sales reps to get the word out to others about their products and/or services. In return sales reps can generate income from their own efforts on a part-time or full-time basis. In most cases you can get started for less than a $100.
- Online Content Production – If you write well and have a topic that your passionate about, why not start a content production business? The cost to launch your business includes a computer and an internet connection. You can easily promote your skills and services on sites such as Elance, Scriptlance, and oDesk where businesses look for contract workers.
- Online Retailer – Are there products that you want to sell? Do you have a passion for a specific industry such as health, sports or the great outdoors? If you love fishing, consider selling fishing supplies & equipment. Starting an online store is easy and costs are extremely low. For example, eBay, Etsy, and Amazon lets you open up an online storefront for as little as $20 a month.
- Social Media Management Services – Businesses of all sizes need help managing their social media profiles and activity. Major platforms such as Twitter, Facebook and YouTube are important networks that companies need in order to raise brand awareness and promote their products. If you already know how to use these platforms then the startup costs are extremely low and you can be up and running in no time.
- Virtual Assistant – For less than $100 you can start a virtual assistant business right from the convenience of your own home. All it takes is a phone, computer, and internet access to be up and running. The work will vary with each client, but may include researching, data entry, appointment setting, and managing social media accounts.
- Consulting Services – Is there a subject that you have extensive expertise on? Do you find that people are always asking your advice in a particular area? Why not put the value of your knowledge to work by launching a consulting business?
- Web Design Services – The majority of small businesses don’t have large budgets for website design. In fact, a 2013 survey conducted by Google and Lpsos found that 55% of small businesses don’t even have a website. That’s where you come in – if you know how to create websites you can start a web design business and start off by working with clients from your local community.
- Affiliate Marketing – An easy and fast way to start a business is to promote the products and service of other businesses as an affiliate marketer. Certain businesses will pay affiliates to promote their products through various methods such as banner advertising, text ads, email marketing, etc. To learn more about affiliate marketing check out sites such as Amazon Associates, Commission Junction, ShareASale, and ClickBank.
- Pet Sitting – Do you love working with animals? How about getting paid to play with pets? Pet sitting could be a great business to start as a part-time or full-time business. Pet sitters charge as much as $100 for overnight stays, and $20 for a 20-minute visit is typical in the industry.
- Driving Service – With platforms such as Uber, Lyft, and Sidecar, you can turn the car you currently own into a business without spending a single dollar. As a suggestion, instead of offering every type of driving service possible, specialize in a service to a target customer so you can stand out above the rest.
If you take a good idea and put into action, you can be well on your way to becoming your own boss. Remember, starting a business is within the reach of anyone who has a good idea, wants to take a risk, and put in the hard work necessary to make it happen.
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Starting a Halfway House or Transitional Housing Facility
Transitional housing provides people with a temporary place to live as they attempt to get back on their feet or make a major transition in their lives. Like any business, when you choose to start a transitional housing facility, you will need to thoroughly research your idea and create a solid business plan that addresses the legal and financial needs of the business.
Do Your Research
Assess your target audience and the services needed in your area. Popular resident audiences for transitional housing include former federal or local inmates, young mothers, at-risk teens, veterans, the homeless, people with disabilities, and substance abusers. If you are unsure about the needs in your community, your local social services department may be able to provide insight.
Learn about the specific population you plan to assist, including average age, the services they currently receive, and where they currently receive them. Some transitional housing facilities only offer housing, while others provide additional services like job support, counseling, and medical care.
In addition to identifying your resident audience, your business plan includes your business’ mission, goals, operations plan and projected financials.
Choose a Location
Once you determine your audience, begin to research potential locations for the housing facility. Now this may be an extremely challenging step for a number of reasons. First are the questions about the physical building itself. Do you plan to lease or own the building? Will you need to build a new structure, or is there an existing facility that you have in mind? If you have your eye on an existing facility, will you need to renovate it? Additionally there are the intangible questions like, do you have buy in from your neighbors in the community?
The US Department of Health and Human Services (HHS) highlights key questions that you should ask yourself when determining which housing model is best for you and your residents, and offers the following advice no matter the type of housing or lease you choose, aim for residences near the following:
Potential places of employment
High schools and community colleges
Health care clinics and hospitals
Once you identify an ideal location, familiarize yourself with the housing regulations and zoning laws in the area.
Register Your Business and Get Licenses
Typically, transitional housing facilities are registered as non-profit organizations, enabling eligibility for certain benefits including grants, government surplus, and tax exemptions.
You must obtain relevant business licenses and permits like any other business. Regulations vary by industry, state, and locality.
Assess Your Business Needs
Determine how many residents your facility can hold, keeping legal, funding, and safety restrictions in mind. Think about the staff you will need to keep your operations running. Assemble a development team, a group of professional consultants, service vendors and other non-profit organizations that collectively bring all of the skills, expertise, knowledge and experience to bear on the development and operation of the project. Non-profit facilities will need to establish a board of directors and governing bylaws.
Also consider the supplies and equipment you will need to not only run the business, but also to furnish the facility. If you receive donated goods, remember that IRS.gov provides guidance on the federal tax requirements for donated property. Consider your operating costs and determine how much rent, if any, you are going to charge residents.
Foster Community Ties
Know going into the process that it is common for a transitional housing facility to face opposition from potential neighbors. Talk with residents, local officials, and other business owners in the community about where you plan to operate, and solicit their support by explaining how your housing plan will benefit the community. For example, if your target audience is at-risk teens, you can explain how a transitional housing facility will provide a steady environment to combat homelessness, vandalism, and loitering.
Once you begin to gain traction in your community, begin to assemble a team of experts, including your local social services department, a realtor, and a lawyer, to help you move forward with your plans.
Considerations for Buying a Small Business
Ever walked into a neighborhood business that was recently purchased? The new ownership might have changed the paint color, décor, and equipment in a flash -- maybe even overnight.
If you’ve ever dreamed of revamping a business you visit frequently, you might be a good match for buying a business. Rather than starting your own company from the ground up, buying an existing business means you can jump right in, get to work and focus on growth.
Before you sign on the dotted line, you may want to consider the following pros and cons of buying a business.
At the same time, many business owners decide to sell their companies because they no longer want to keep up with the day-to-day operations -- and they may have fallen out of good recordkeeping or organizational habits. Stepping in as a new owner is a great time to enact new policies and streamline the way a business runs. If you can enact change in a positive, encouraging manner, your leadership might be just what a business needs to get to the next level.
If you don’t have the capital to buy a business, bootstrapping a business from your own concept and bringing it to life can be just as rewarding as writing a check and settling down at your new desk. But if you have the capital to take over an existing operation, it may be a less stressful experience than starting from scratch. “All of the bugs of the business have probably been ironed out and all of the problems that the business has encountered at the early stage of their development have been resolved,” mentor Norm Silverstein explained on the SCORE Small Business Success Podcast. “Basically, most of the dirty work has been done when you buy an existing business. To me, that's the most advantageous way of doing it, and the least risky.”
If you’re thinking of buying a business, visit a SCORE mentor to learn more about the process and what to expect.
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7 Tips for Starting a Food Business
Starting a food business has to be one of the most challenging businesses to get into. The harsh reality is that most fail within the first year. The restaurant business in notoriously tough, but where there is a will there is often a way! While vision and ambitions are important, turning that ambition into success requires research, planning, capital, business acumen, and perseverance, more research and more planning. Here are some tips that can help entrepreneurs start, operate, and grow their fast food business successfully and within the law.
Do Your Research
The food industry in general is very competitive so it is imperative that you do your research before getting started. Business networking events (such as those operated by Small Business Development Centers, SCORE, and local Chambers of Commerce) offer a great venue for picking the brains of fellow business people. Try to find out what works, what doesn't, and what they would do differently. If you are aware of restaurants that have failed, try to identify why. Online community forums are a great way of gauging market need and customer opinion about local food service businesses.
Doing your research will help you to define your target market, niche opportunity, and identify your greatest risk factors, so that you can build a strong business case and move forward. Whether it's specializing in authentic Chicago deep dish or cupcakes - focus on providing a unique and quality product - don't try to be all things to all people. Be specific!
Consider Starting Small
You should consider testing your idea before you go all out with a pop up location. It will give you an opportunity to run through your idea without all the risk. Many food businesses start as a hobby at home and once they outgrew the space they moved on to something bigger. Going straight from a business plan to the opening a storefront is a big step; the idea is that you have an opportunity to get the kinks out. You can rent a food truck for a month or try a local market just to see how things go. When you do finally make the move to permanent location you can scale up.
Alternatively, fast-food franchises might be an option worth considering for entrepreneurs who are not quite ready to make the leap into full business ownership.
Build a Business Plan
A business plan doesn't have to be an overly formalized document, but going through the process of building and constantly tweaking your plan will help you match the strengths of your business to the opportunities the market presents. It can also help you better deal with threats as they emerge.
A business plan is also essential when it comes to communicating with others - such as customers, partners, and investors - if you want any of these to believe in you, you must be able to convince them that you know what you are talking about when it comes to your business.
Not all businesses need investors to get started, particularly if you start small. However, there are ranges of options from very small microloans that can help smaller fast food outlets get started, to more comprehensive small business loans such as the popular SBA 7(a) and 504 loan programs.
If you are seeking investment, plan it out. Use your business plan and the knowledge you’ve gained from your pop up test as the basis for a loan proposal or investment plan. Investors and lenders will want to know everything about your business idea or venture. Also, be realistic about how much money you need. You can save lots of capital just by buying local produce and purchasing surplus equipment.
Start Your Business the Right Way
Whatever your business type, you must take care of the fundamental regulatory and legal steps involved in starting a business. From tax ID numbers to licensing make sure everything is in order.
Know Your Food Laws and Regulations
This should be part of your research to begin with, but it’s worth making it a one off tip. Know what the laws and regulations are in your state! From labor laws to food safety laws understanding and achieving compliance with legal and regulatory requirements can have a big effect on the success of a food operation big or small.
Find a Business Mentor
Talk to your local SBA office, SCORE, or Small Business Development Center (SBDC). They can give you unrivalled, objective, and FREE advice about the local market and the process of starting a successful business.
SBA Resource Partners Helped Over 1 Million Businesses Last Year – Are You Next?
If you are thinking about starting a business of your own, the SBA has the resources to help you plan, prepare and manage that business. The SBA helps aspiring entrepreneurs and small business owners just like you – over one million each year – to start and grow their businesses.
The SBA’s nationwide network of Resource Partners provides entrepreneurs with mentoring, training/counseling, business assistance and access to SBA’s programs and services. In fiscal year 2015, our collective efforts helped small businesses to get $4.7 billion in capital infusion, start over 19,000 new companies, and create and retain more than 55,000 jobs.
Under the direction of SBA’s Office of Entrepreneurial Development, more than one million small business owners receive business counseling and assistance through one or more of the SBA’s counseling and training programs. They include the Small Business Development Centers (SBDCs), Women’s Business Centers (WBCs), the national SCORE mentoring program, Emerging Leaders, Regional Innovation Clusters and ScaleUp America.
These dynamic SBA resource partners and entrepreneurial programs provide quality one-on-one consulting, training and counseling that can help you start, grow and compete in the marketplace.
The numbers speak for themselves:
- Small Business Development Centers counseled and trained nearly 500,000 clients.
- SCORE counseled and trained more than 349,000 clients.
- Women's Business Centers provided assistance to over 140,000 clients.
- Emerging Leaders initiative expanded to serve 48 communities and over 800 small businesses.
- Regional Innovation Clusters initiative served nearly 1,000 small businesses and adding three new Clusters.
- ScaleUp America initiative ended fiscal year 2015 with over 200 participating businesses in eight communities. ScaleUp has expanded to seven new communities in fiscal year 2016.
The SBA also helps target market audiences such as women, veterans, young entrepreneurs, growth-oriented businesses and those over age 50. We reached over 170,000 clients during our Encore Entrepreneurship campaign, including the National Summer of Encore Mentoring with AARP. During the campaign, more than 100 local sessions and workshops were hosted by SBA district offices, including webinars held nationwide with subject matter experts, industry professionals, successful entrepreneurs, and business coaches.
If you are looking for useful resources to start, grow or manage your small business, reach out today to one of our resource partners or consider an online e-course at our Small Business Learning Center.
We’ll help you connect with your nearest SBA District Office, SBDCs, SCORE Chapter or WBCs. Go to SBA’s Local Assistance map to get started. Here you can find useful counseling, training and mentoring from any of these partners for starting, growing and managing your small business.
You can also go to www.SBA.gov/ed for a complete menu of available programs and services.
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Understanding Gross Margin
Ignoring your financial statement is like ignoring the health of your business. Startups and new business owners often overlook understanding gross margin. This can have a direct impact on your ability to effectively manage a growing business, price your products, and most importantly, make a profit.
Gross Margin Overview
The gross margin represents the percent of total sales revenue that the company retains after incurring the direct costs associated with producing the goods and services sold. The higher the percentage, the more your business retains on each dollar of sales to service its other costs and obligations.
But gross margin is so much more than that; it is a measure of your production efficiencies and it determines your break-even point. It is a key calculation as you assess your startup business risk and profitability.
The Importance of Knowing Your Gross Margin
Understanding and monitoring gross margins can also help business owners avoid pricing problems, losing money on sales, and ultimately stay in business. If you don’t know what your gross margin is, then making sense of anomalies in your income statements becomes tricky.
Many businesses that appear to be thriving often fail because their prices are too low or their costs are too high and they can’t make a profit. Establishing a low price strategy is tempting, especially when dealing with cutthroat competition – however, it’s rarely sustainable and it can be tough to increase prices later, even with a loyal customer base. Using gross margin calculations and other factors as you plan your business can help you avoid pricing mistakes before it’s too late.
Cost control is another area that can trip up small business owners. It’s surprisingly easy for staff to ignore cost control procedures, which can quickly erode your margins. For example, if higher cost materials have made their way into your production process (and this could be something as simple as a chef using a higher quality food product or making bigger sandwiches in the kitchen than had been budgeted for) – then you have a problem.
Knowing what your gross margin is on every product throughout the life cycle of your business and acting on any variations you detect can help you identify these problems before it’s too late.
How to Calculate Your Gross Margin
Calculating gross margin is easy if you’ve been in business long enough to get some record keeping under your belt, but for startups the process is a little more complex.
Calculating gross margin for an existing business – Start by looking at historical data over a business quarter or year and identifying your company’s total revenue for this period and the costs of goods sold (raw materials and labor).
Gross Margin (%) = (Revenue – Cost of Goods Sold)/Revenue
Calculating gross margin for a startup – If you don’t have any income reports to go by, calculating your potential gross margins involves some research. Consider the following:
- What is the competition doing? If you can, try to find out the gross margins of your competitors or industry averages to benchmark where yours should be. Even if their financial data is not in the public domain, their pricing and your understanding of costs will give you a rough estimate as to where your margins should be.
- Assess your costs and explore ways you can decrease these over time. This should give you an early indication of the profitability of your business. Remember that gross margins change over time through reduced costs and increased efficiencies.
Using Gross Margin to Calculate Product Pricing
While understanding gross margin can help you avoid pricing and cost control nightmares, should you be using it to calculate pricing? Many businesses go this route because it clearly expresses how many of your sales dollars are profit. However, many other factors help determine your pricing strategy, including potential market share, distribution costs, seasonal considerations, perceived value, and more.
How to Become a Street Vendor
Everyone has seen a street vendor at some point and many of us have purchased from him or her. Consider for a moment self-employment and the opportunity to work outdoors with a schedule that is always convenient for you. Becoming a street vendor may seem like a relatively easy process but it does involve organization and patience to acquire the proper licenses and permits and operate it as a legal business.
If you’re a first-time vendor and are unsure at first if you’re ready to commit to street vending and peddling, try selling your general merchandise at local flea markets, holiday markets, and street fairs where, in most cases, only a temporary sales license is necessary. However, if you plan to sell food be prepared for a more in depth application process. The bottom line is no matter what type of business you have; make sure that you meet all the legal standards for your state for a small business.
A flea market is also a great place to test the market. Most cities have a numerous open markets with different demographics, which will allow you to test the waters before you go all in. In addition they are often very established in communities and have a built in following. Once you’ve narrowed down your focus, it would be a great opportunity to build your own following before you venture out.
In addition to customer research a market is a great opportunity to get to know who your competition might be. Due diligence is key especially in the beginning stages.
Licenses and Permits
License and permit requirements for street vendors vary based on location and the items you plan to sell.
You may need to obtain the following permits:
- Sales tax permit from your state government’s revenue agency
- Tax ID number your local government revenue agency
- A general business license from your city or county clerk’s office
- An additional vendor license from your city or county government
You will also need to comply with any general licensing and registration requirements that apply to all businesses in your state.
If you intend to practice food related street vending contact your state or county’s Department of Health which regulates and issues food related licenses and permits. You will likely be required to attend a Food Protection Course for Mobile Food Vendors. The cost of the course ranges from $50 to $75.00 and can take up to four hours over two days.
Before you complete the required legal documents, consider precisely where your business will be located. Laws concerning dates, times, and locations for vendors to operate usually vary by city. Larger cities like New York and Philadelphia have limits on the number of vendors so be sure to check with your city or county government when considering a location for your business. Going back to the flea markets, they are great testing grounds for a more permanent location.
FoodSafety.gov provides federal and state contacts for licensing and food safety information.
How to Start a Retail Business
'Main Street' has now become a generic term synonymous with U.S. small business in general. But for many entrepreneurs, the prospect of joining Main Street in its more literal meaning - i.e. the primary retail street of a village or town - still holds an enormous amount of appeal as a business venture.
Given the right amount of market research, business planning, and financial support, starting a retail business (and joining the more than 24 million people who earn a living this way) can offer many rewards to the right kind of entrepreneur.
But how do you go about starting a retail business?
Here are some steps that you will need to follow (from a business planning, structure, and legal perspective) to open and operate a successful retail operation.
1. Determine which Type of Retail Business Model is Right You
Once you've developed a business plan and have an idea of what it is you wish to retail, you will need to decide which type of retail model is right for you. Traditional choices include store retailing, online retailing, non-store retailing (such as door-to-door sales, mail order, etc.) or a combination of any of these three.
You may also want to consider whether you want to launch your own retail business or buy into a franchise opportunity. Both have advantages and disadvantages (which I won't go into in this post). But, if you consider going down the franchising route, this guide offers helpful advice on buying and evaluating a franchise and tips on how to avoid common scams.
2. Find the Right Location
As a new retail business you definitely need to be where your customers are - and almost certainly need to get it right first time.
The location you choose should dovetail onto the type of retail trade you are starting. For example, a jewelry store might not sit comfortably or profitably in a suburban strip mall, whereas an organic pet food store might. Check local demographics including employment statistics, consumer statistics, and more using these guides from the government.
You'll also need to check local zoning laws, even if you want to operate a home-based retailing business - many local governments restrict what business can be done from home.
Above all, when it comes to location, you'll want to ensure you combine visibility, accessibility, affordability and commercial lease terms that you can live with, through the good times and the bad.
Get more advice and tips from SBA.gov on choosing a business location.
3. Finance your Retail Venture
The entry costs for retail can vary. If your operation is online or home-based you may not need as much access to capital as a Main Street store-based retailer. Either way, you will need funds to support start-up costs such as inventory, fixtures and fittings, marketing and advertising, as well as employee salaries, and so on.
If you don't qualify for traditional bank loans, you might want to look to a government-backed loan. What this means is that the government - through the Small Business Administration (SBA) provides a guaranty to banks and lenders for money lent to small businesses, rather than lending the businesses money directly. Don't even think about a federal government grant as an option -- the government doesn't offer grants to for-profit businesses; there is no such thing as free money.
Read more about SBA loans here.
4. Determine Your Business Structure - Do you want to go it Alone or in Partnership?
It's worth thinking about. If you don't have family or friends who can help out with the day-to-day logistics of running a retail operation, a business partner can help. They can also help share the risk. For more information about business partnerships, as well as other alternative business entities such as corporations, LLCs, etc. - and how to go about setting them up - refer to this information on choosing your business structure.
5. Take Care of the Regulatory Requirements involved in Starting and Operating a Business
It doesn't matter whether you are starting a retail business out of your home or on Main Street, there are several regulatory and legal fundamentals that you must attend to. This is where many small business owners stumble. What laws apply to your specific business; what licenses and permits are required; what happens when you need to hire your first employee?
This very easy to navigate guide - 10 Steps to Starting a Business - (from the government) walks you through the essential steps you must follow to make sure you properly plan, prepare and manage your business.
At the end of the day, talk to those in your community who knows the market and local regulations. There are many resources- including SCORE, local SBA offices, and Small Business Development Centers - that offer free counseling and training programs to help you get started and expand your business. Find help near you here.
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How Color Can Help Boost Your Business
What can color do for your business’s marketing? A better question might be: What can’t it do? According to a recent infographic from Kissmetrics, color can:
- Make your brand more recognizable. Use of color increases brand recognition by 80 percent.
- Get customers to buy a new product. A whopping 93 percent of consumers say “visual appearance” is the primary factor they consider when buying a new product.
- Get customers to buy any product. Some 85 percent of consumers say color is a primary reason why they buy.
Here are some factors to keep in mind when choosing and using color in your marketing materials.
- Be consistent. For best results, you’ll want the colors in your ads, website, packaging and print marketing materials to tie in with the colors in your business logo.
- Consider the format of your marketing materials. For example, if your business has a physical location, you may need a brightly colored or high-contrast store sign to attract the attention of people driving by. If you have an ecommerce or B2B business and most of your marketing is done online, subtler colors might be just as effective.
- Assess the competition. You’ll need to walk a fine line between standing out from your competitors and fitting in with them when it comes to color. For instance, if you own a landscaping service, plant nursery or recycling company, green is a logical color to use because it’s “shorthand” for nature. Purple and hot-pink marketing materials wouldn’t work as well.
Here’s a closer look at what different colors mean in marketing.
Red: Viewing red physically increases people’s heart rate and energizes them. This is why “sale” tags are also in red. You can use red to attract attention (like a stop sign) and create a sense of urgency in prospective customers. Red would not be a good color for a business like a spa or salon that emphasizes relaxation and calm.
Orange: Slightly less aggressive than red, orange is still good at attracting attention and can be used to create a call to action. It’s also currently a trendy color, especially online.
Yellow: Yellow is bright, cheery and optimistic. It’s a good color for grabbing attention without the aggressive edge of red. Yellow has been shown to stimulate thinking and help people generate ideas; it conveys innovation and newness. However, yellow can be overwhelming in large doses, because it’s the most difficult color for the eye to take in.
Overall, warm colors (red, orange and yellow) are stimulating and exciting. They’ve also been shown to make people hungry, which is why so many quick-service restaurants use these colors in their marketing and interiors.
Blue: Blue is most North Americans’ favorite color, which can make it a good choice for marketing materials, but can also make it harder to stand out. Blue creates a sense of calm, security and trust, which is why it’s often used by financial services or healthcare businesses.
Green: Green is the easiest color for the eye to process, so if you want to convey calm and relaxation, it’s a perfect choice. It also symbolizes nature and the environment.
Purple: A regal color, purple combines the energy of red with the calm of blue. It conveys wealth, imagination and femininity (one reason it’s often used in skincare and beauty product marketing).
Pink: Pink is often used to market products targeted at women and girls, but it’s important to make sure your use of pink doesn’t backfire. Slapping pink on product packaging in order to mark it as being “for women” can come off insulting to female consumers.
Black: Black signifies power, sophistication and luxury, which is why it’s often used in marketing luxury cars or fashions. It makes a great contrast with other colors, but too much of it can look overpowering. Avoid using black as a background on print or online marketing materials; it will make text too hard to read.
White: White symbolizes innocence, cleanliness and purity, which is one reason healthcare companies often use it in their marketing. It’s a great background for all kinds of colors. Using a lot of white can come off as very high-tech (think Apple) but also as cold.
Gray: The ultimate neutral, gray conveys security and dependability. Shift it to silver, and it suggests high-tech, glamour or wealth. Pairing with gray is a good way to tone down brighter colors.
Brown: Brown works well for “earthy” businesses such as restaurants, natural products or environmentally friendly businesses. It suggests honesty and authenticity. Turn brown into gold, and it conveys wealth and quality.
Color is complex, involving not only the color itself but also its intensity and warmth. To get the effect you want, it’s worth enlisting the services of a graphic designer who can help you choose the right color combinations for your marketing goals.
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10 Benefits of Business Planning for all Businesses
It's a shame that so many people think business plans are just for startups, or to back up loan applications, or for getting investors. The truth is that business planning offers serious benefits for everybody in business.
And I'd like to point out that none of these benefits require a big formal business plan document. A lean business plan (as in What Business Plan Type is Best for Me) is usually enough. It takes an hour or two to do the first plan, then just an hour or two to review and revise monthly.
Here are those top ten benefits.
- See the whole business. Business planning done right connects the dots in your business so you get a better picture of the whole. Strategy is supposed to relate to tactics with strategic alignment. Does that show up in your plan? Do your sales connect to your sales and marketing expenses? Are your products right for your target market? Are you covering costs including long-term fixed costs, product development, and working capital needs as well? Take a step back and look at the larger picture.
- Strategic Focus. Startups and small business need to focus on their special identities, their target markets, and their products or services tailored to match.
- Set priorities. You can't do everything. Business planning helps you keep track of the right things, and the most important things. Allocate your time, effort, and resources strategically.
- Manage change. With good planning process you regularly review assumptions, track progress, and catch new developments so you can adjust. Plan vs. actual analysis is a dashboard, and adjusting the plan is steering.
- Develop accountability. Good planning process sets expectations and tracks results. It's a tool for regular review of what's expected and what happened. Good work shows up. Disappointments show up too. A well-run monthly plan review with plan vs. actual included becomes an impromptu review of tasks and accomplishments.
- Manage cash. Good business planning connects the dots in cash flow. Sometimes just watching profits is enough. But when sales on account, physical products, purchasing assets, or repaying debts are involved, cash flow takes planning and management. Profitable businesses suffer when slow-paying clients or too much inventory constipate cash flow. A plan helps you see the problem and adjust to it.
- Strategic alignment. Does your day-to-day work fit with your main business tactics? Do those tactics match your strategy? If so, you have strategic alignment. If not, the business planning will bring up the hidden mismatches. For example, if you run a gourmet restaurant that has a drive-through window, you're out of alignment.
- Milestones. Good business planning sets milestones you can work towards. These are key goals you want to achieve, like reaching a defined sales level, hiring that sales manager, or opening the new location. We're human. We work better when we have visible goals we can work towards.
- Metrics. Put your performance indicators and numbers to track into a business plan where you can see them monthly in the plan review meeting. Figure out the numbers that matter. Sales and expenses usually do, but there are also calls, trips, seminars, web traffic, conversion rates, returns, and so forth. Use your business planning to define and track the key metrics.
- Realistic regular reminders to keep on track. We all want to do everything for our customers, but sometimes we need to push back to maintain quality and strategic focus. It's hard, during the heat of the everyday routine, to remember the priorities and focus. The business planning process becomes a regular reminder.
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